Property Market Expectations for 2019
As each year draws to a close, it is always interesting to read the international forecasts for the year ahead. Any reflection of the construction and property market across Ireland and the UK will take into account that 2018 has been a year of highs and lows. The year started with optimism, coming off a 2017 high; but the collapse and near-collapse of high-profile industry giants shook the marketplace in the first half of the year. Here in Ireland, uncertainty surrounding new rules for building heights in urban areas caused a 49% slowdown in the construction of apartments in the second half of the year.
The Government’s own plan for the delivery of new homes, Project 2040, is woefully behind schedule yet private developers are still being hamstrung by a range of factors, from planning objections to the high cost of development land. With a strong focus on the commercial sector – and the majority of homes being delivered to the BLR sector – it remains unclear where the necessary supply of private new homes to the residential sector is going to come from.
In the UK, year-end data shows that average house price growth has dropped to levels last seen in 2012. It is difficult to gauge how much of this can be attributed to Brexit uncertainty. While in Ireland, this is spun as an opportunity, it would be recklessly naive not to acknowledge and prepare for the threat this presents for Irish developers and main contractors delivering UK projects right now or with a pipeline of UK projects.
With an eye firmly on the domestic market, we must expect that the focus will remain on tackling the now-nationwide rental crisis in the context of social, affordable and private housing.
Despite seemingly-relentless criticism, the RPZs are only now starting to work. Given the additional investigative and enforcement powers given to the RTB in 2018, landlords can expect existing loopholes to be swiftly closed. With longer tenancy periods being muted as standard, the landscape for private investors is likely to continue to change. Arguably, these changes will be pro-tenant and possibly, by default, anti-landlord. To be clear, we are fully in favour of a more professional class of landlord and investor in the marketplace, rogue or non-compliant landlords damage the industry for all; however, making the market unattractive to new investors will only compound the issue of low supply.
Technology was one of the greatest game-changers we saw in recent years and this trend is likely to continue into 2019. On the construction side of things, prefabrication or offsite construction will be favoured by UK Government on all PPP projects from January 2019. It is likely that Ireland will follow this lead, albeit over the next few years. Finally, digitisation of the built environment will continue to drive efficiencies as margins remain tight.
As always, we are interested to hear your thoughts on this.
Director / Business Development
Lotus Investment Group